The ‘shocking’ reversal by the Government will make life more expensive for Brits and businesses, UKHospitality said.
UKHospitality has said the U-turn to introduce a holiday – or tourist – tax directly contradicts and undermines the Government’s aim to reduce the cost of living.
Extra cost
Brits took over 89 million overnight trips in England in 2024 and stayed for a total of 255 million nights, according to Visit Britain.
Analysis from UKHospitality shows that the tax could hit Brits with up to £518 million in additional tax, making holidays in England more expensive, with costs passed directly onto consumers and fuelling inflation.
If set at the level of the Edinburgh visitor levy, it would create an effective 27% VAT rate for consumers on their holidays, making it one of the highest in Europe. It would see consumers visiting destinations in England charged double the tax of visiting Paris and 70% more than in Barcelona and Rome.
U-turn
It’s a significant U-turn by the Government, just two months after its Tourism Minister told the House of Commons it “had no plans to introduce a tourism tax”.
Our response
Kate Nicholls, Chair of UKHospitality, said: “The Government has gone back on its word and introduced a damaging holiday tax. This is the wrong way to make policy and the fastest way to undermine investment.
“It has blatantly disregarded the commitments it gave to the House of Commons just two months ago that it ‘had no plans’ to introduce this tax.
“This is a shocking U-turn that will only make life more expensive for working people. It could cost the public up to £518 million in additional tax when they travel in the UK and having knock-on impacts for the wider hospitality sector.
“It will effectively increase the rate of VAT to 27% for working people who want to enjoy a holiday in the UK – making it one of the highest tax rates for consumers in Europe.
“Make no mistake – this cost will be passed directly onto consumers, drive inflation and undermine the Government’s aim to reduce the cost of living.
“It’s important that the Government has paused to consult. We will be working hard with the Chancellor’s team to highlight the damage this will do to the cost of living.”
